05/09/2005 Council Packet - Laserfiche WebLink

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Executive Summary 1 1 Executive Summary During 2004, the City undertook a study as a first step in developing an overall pavement management program. The result of that study was a Pavement Management Report ( "PMR ") prepared by TKDA which included an evaluation of the current condition of the City's local streets and provided an estimate of the cost of maintaining and reconstructing those streets to maximize the useful life of these assets and to maintain an acceptable level of service. The purpose of this Pavement Management Plan Financing Report is to identify available funding sources to implement the PMR, to project the impact of these funding sources on the user fees and property tax rates over the next 10 years and to assist the City in developing the associated policies required to implement the PMR in a fair and equitable mariner. Within this purpose, a number of objectives have been as follows: • Determine a financing plan that is sustainable over the long -term • Allocate the costs of the PMR in a fair and equitable manner to the citizens of Lino Lakes • Obtain appropriate, to the extent reasonably possible, non -tax revenues to finance the PMR • Maximize the use of appropriate external financing sources • Minimize the utilization of City property taxes The PMR included an estimate of the costs to maintain the City's streets over the next ten years. These costs were divided into two categories, reconstruction and maintenance. Reconstruction costs are related to those streets that have outlived their useful lives so that the pavement condition is in need of removal and replacement. Maintenance costs are related to the cost to sealcoat and overlay those streets whose pavement life can be extended through on -going maintenance. It is important to note that these costs include only the streets in existence at the time the PMR was prepared. The total cost of the PMR is estimated to be $21,570,000 over the next ten years. Of this amount, a $4,070,000 is estimated to be needed for maintenance and $17,500,000 is estimated to be needed for reconstruction projects. There are a number of sources available to the City for the funding of the PMR. The City could designate a portion of its local property tax levy each year to pay for all or a portion of the PMR. We developed projections of the property tax rate impacts of levying a tax to pay for the entire cost of the PMR each year based on 5 %, 7.5 %, and 10% growth rates in the City's tax base. The largest tax rate impact was projected to occur in 2010 and ranged from 15.686% to 19.793 %. This resulted in a maximum property tax impact ranging from 31 approximately $358 to $452 on a home valued at $228,400. Property tax dollars do not lend themselves particularly well to funding capital projects on a pay -as- you -go basis because they tend to result in substantial volatility in the tax rate and in the resulting property taxes paid. In addition, the legislature haE imposed levy limits on local governments from time to time. If levy limits wei again imposed, a property tax levy for funding the PMR would most likely not be available to the City Property taxes do lend themselves fairly well to a Sprtngsted - 1 7 0 - City of Lino Lakes - Pavement Management Plan Financing Re